The retail sector continues to experience bullish investors as it has proven to be a strong asset class overall. While in 2020 many investors as well as the greater real estate and retail community thought Covid may have squelched the sector for good, the perceived risk in retail investment properties has steadily been diminishing from where it was 12 to 18 months ago. In fact, year-to-date, sale activity for retail properties with prices greater than $10 million in the Western U.S. has been $5.5 billion, with 27% or nearly $1.5 billion of that in the months of September and October combined. 

The reason for this is twofold. First, there was a relatively quick shake-out of poor retail performers in 2020. Second, the retail survivors have proven their sustained strength. With that said, a recent ICSC report shows at least 10 months of collections exceeding 90% for retail centers overall and a recent TREPP report shows the lowest level of watch-list loans on retail centers in years. What this means is that the pandemic did not result in a retail apocalypse – the fear that there would be wholesale failures in retail turned out to be unfounded. 

Notably grocers, essential needs and many food retailers did the same or better during Covid with many of these retailers posting inflation-adjusted increased sales at 5% plus over 2019 levels.